Exhibit 99.1
FOR IMMEDIATE RELEASE
Tower International Reports Strong First Quarter
LIVONIA, Mich., May 5, 2011 – Tower International, Inc. [NYSE: TOWR], a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its first quarter 2011 results.
| • | Revenue for the quarter was $600 million, up 25 percent from $479 million in the first quarter 2010. Excluding changes in steel pricing and exchange rates, revenue was up $100 million or 21 percent. |
| • | Adjusted EBITDA for the quarter was $65.7 million, up 30 percent from $50.7 million a year ago. The improvement was driven by higher volume, offset partially by less-favorable product mix and launch-related costs. |
| • | Adjusted EBITDA for the last twelve months increased to $205 million. |
| • | Net income in the first quarter of 2011 was $9 million or $0.45 per diluted common share. This included certain items that adversely impacted results by $2.4 million, as detailed below. Excluding these items and comparable items in the first quarter of 2010, diluted adjusted earnings per common share were $0.57, compared with a loss of $0.50 a year ago. |
| • | Free cash flow use of $40.7 million in the first quarter was more than explained by seasonality and timing, including working capital seasonality, the timing of customer-owned tooling, and the semi-annual interest payment on senior notes. |
“It was an excellent start to 2011 for Tower”, said President and CEO Mark Malcolm. “We continued to deliver our ongoing priority of converting recovering auto volumes into improved earnings and good margins, demonstrating Tower’s positive operating leverage and global competitiveness. We also made meaningful further progress on our longer-term priority of sustainable future growth by approving an expansion for one of Tower’s China joint ventures and by accessing the adjacent defense, aerospace, and industrial markets through the acquisition of the assets of W Industries.”
Tower to Host Conference Call Today at 11 a.m. EDT
Tower will discuss its first quarter 2011 results and other related matters in a conference call at 11 a.m. EDT today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company’s website or by telephone. The slide presentation and webcast can be accessed via the investor relations portion of Tower’s websitewww.towerinternational.com. To dial into the conference call, domestic callers should dial 1-866-393-4576, international callers should dial 1-706-679-1462. An audio recording of the call will be available approximately two hours after the completion of the call. To access this recording, please dial 1-800-642-1687 (domestic) or 1-706-645-9291 (international) and reference Conference I.D. # 61564002. A webcast replay will also be available and may be accessed via Tower’s website.
Non-GAAP Financial Measures
This press release includes the following non-GAAP financial measures: “Adjusted EBITDA”, “free cash flow” and “net debt.” We define Adjusted EBITDA as net income / (loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations provided in this press release. Free cash flow is defined as net cash provided by or used in operating activities less cash disbursed for purchases of property, plant and equipment. Net debt represents total debt less cash and cash equivalents. We use Adjusted EBITDA, free cash flow and net debt as supplements to information provided in accordance with generally accepted accounting principles (“GAAP”) in evaluating our business and they are included in this press release because they are three of the principal factors upon which our management assesses performance. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP are set forth below. The non-GAAP measures presented above are not measures of performance under GAAP. These measures should not be considered as alternatives for the most directly comparable financial measures calculated in accordance with GAAP. Other companies in our industry may define these non-GAAP measures differently than we do and, as a result, these non-GAAP measures may not be comparable to similarly titled measures used by other companies in our industry. In addition, certain of our non-GAAP financial measures exclude financial information that some may consider important in evaluating our performance.
Forward-Looking Statements and Risk Factors
This press release contains statements which constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the potential for future growth through the acquisition of the assets of W Industries and the expansion of our Chinese Joint Venture, and statements regarding the existence of a multi-year recovery cycle in the automotive sector. The forward-looking statements can be identified by words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “project,” “target,” and other similar expressions. Forward-looking statements are made as of the date of this press release and are based upon management’s current
expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. The following important factors, as well as risk factors described in our reports filed with the SEC, could affect (and in some cases have affected) our actual results and could cause such results to differ materially from estimates or expectations reflected in such forward-looking statements:
| • | automobile production volumes; |
| • | the financial condition of our customers and suppliers; |
| • | our ability to make scheduled payments on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness; |
| • | our ability to refinance our indebtedness; |
| • | our ability to generate non-automotive revenues; |
| • | our ability to operate non-automotive businesses; |
| • | our ability to integrate acquired businesses; |
| • | our customers’ ability to obtain equity and debt financing for their businesses; |
| • | our dependence on our largest customers; |
| • | significant recalls experienced by our customers; |
| • | pricing pressure from our customers; |
| • | work stoppages or other labor issues affecting us or our customers or suppliers; |
| • | risks associated with our non-U.S. operations, including foreign exchange risks and economic uncertainty; |
| • | costs or liabilities relating to environmental and safety regulations; and |
| • | any increase in the expense and funding requirements of our pension and other postretirement benefits. |
We do not assume any obligation to update or revise the forward-looking statements contained in this press release.
Contact:
Derek Fiebig
Executive Director, Investor & External Relations
(248) 675-6457
fiebig.derek@towerautomotive.com
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts - unaudited)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenues | $ | 599,635 | $ | 479,129 | ||||
Cost of sales | 530,065 | 425,904 | ||||||
Gross profit | 69,570 | 53,225 | ||||||
Selling, general and administrative expenses | 37,722 | 33,021 | ||||||
Amortization expense | 892 | 710 | ||||||
Restructuring and asset impairment charges, net | 483 | 4,107 | ||||||
Operating income | 30,473 | 15,387 | ||||||
Interest expense | 12,518 | 13,790 | ||||||
Interest income | 263 | 189 | ||||||
Other expense | 850 | — | ||||||
Income before provision for income taxes | 17,368 | 1,786 | ||||||
Provision for income taxes | 6,613 | 4,134 | ||||||
Net income / (loss) | 10,755 | (2,348 | ) | |||||
Less: Net income attributable to the noncontrolling interests | 1,733 | 2,134 | ||||||
Net income / (loss) attributable to Tower International, Inc. | $ | 9,022 | $ | (4,482 | ) | |||
Less: Preferred unit dividends | $ | — | $ | (4,269 | ) | |||
Net income / (loss) available to common shareholders | $ | 9,022 | $ | (8,751 | ) | |||
Weighted average common shares outstanding | ||||||||
Basic | 19,101,588 | 12,467,866 | ||||||
Diluted | 19,890,083 | 12,467,866 | ||||||
Net income / (loss) per share attributable to Tower International, Inc.: | ||||||||
Basic | $ | 0.47 | $ | (0.70 | ) | |||
Diluted | 0.45 | (0.70 | ) | |||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)
| March 31, 2011 | December 31, 2010 | |||||||
| ASSETS | ||||||||
Cash and cash equivalents | $ | 134,495 | $ | 150,345 | ||||
Accounts receivable, net of allowance of $2,899 and $1,674 | 377,249 | 297,086 | ||||||
Inventories | 80,862 | 73,189 | ||||||
Deferred tax asset - current | 11,401 | 12,406 | ||||||
Assets held for sale | 8,489 | 8,178 | ||||||
Prepaid tooling and other | 82,229 | 57,754 | ||||||
Total current assets | 694,725 | 598,958 | ||||||
Property, plant and equipment, net | 633,347 | 627,497 | ||||||
Goodwill | 70,136 | 66,309 | ||||||
Deferred tax asset - non-current | 18,835 | 17,377 | ||||||
Other assets, net | 28,890 | 30,035 | ||||||
Total assets | $ | 1,445,933 | $ | 1,340,176 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current maturities of long-term debt and capital lease obligations | $ | 131,146 | $ | 109,848 | ||||
Accounts payable | 405,726 | 366,761 | ||||||
Accrued liabilities | 126,438 | 132,614 | ||||||
Total current liabilities | 663,310 | 609,223 | ||||||
Long-term debt, net of current maturities | 450,526 | 432,726 | ||||||
Obligations under capital leases, net of current maturities | 15,765 | 15,604 | ||||||
Deferred tax liability - non-current | 14,865 | 12,710 | ||||||
Pension liability | 74,574 | 76,403 | ||||||
Other non-current liabilities | 82,209 | 81,884 | ||||||
Total non-current liabilities | 637,939 | 619,327 | ||||||
Total liabilities | 1,301,249 | 1,228,550 | ||||||
Stockholders’ Equity: | ||||||||
Tower International, Inc.’s stockholders’ equity | ||||||||
Common stock, $0.01 par value, 350,000,000 authorized, 19,101,588 issued and outstanding | 191 | 191 | ||||||
Additional paid in capital | 299,960 | 296,262 | ||||||
Accumulated deficit | (183,534 | ) | (192,556 | ) | ||||
Accumulated other comprehensive loss | (18,217 | ) | (36,530 | ) | ||||
Total Tower International, Inc.’s stockholders’ equity | 98,400 | 67,367 | ||||||
Noncontrolling interests in subsidiaries | 46,284 | 44,259 | ||||||
Total stockholders’ equity | 144,684 | 111,626 | ||||||
Total liabilities and stockholders’ equity | $ | 1,445,933 | $ | 1,340,176 | ||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income / (loss) | $ | 10,755 | $ | (2,348 | ) | |||
Adjustments required to reconcile net income / (loss) to net cash provided by / (used in) operating activities: | ||||||||
Non-cash restructuring and asset impairment charges | — | 2,699 | ||||||
Deferred income tax provision | 1,333 | — | ||||||
Depreciation and amortization | 30,147 | 30,273 | ||||||
Non-cash share-based compensation | 3,698 | — | ||||||
Pension expense, net of contributions | (1,392 | ) | (817 | ) | ||||
Change in working capital and other operating items | (58,503 | ) | (24,137 | ) | ||||
Net cash provided by / (used in) operating activities | $ | (13,962 | ) | $ | 5,670 | |||
INVESTING ACTIVITIES: | ||||||||
Cash disbursed for purchases of property, plant and equipment, net | $ | (26,698 | ) | $ | (18,685 | ) | ||
Acquisition of a third-party debt instrument | (11,254 | ) | — | |||||
Net assets acquired, net of cash acquired | — | (16,687 | ) | |||||
Net cash used in investing activities | $ | (37,952 | ) | $ | (35,372 | ) | ||
FINANCING ACTIVITIES: | ||||||||
Repayments of term debt | $ | — | $ | (1,183 | ) | |||
Partial redemption of senior secured notes | (17,000 | ) | — | |||||
Preferred unit dividends | — | (95 | ) | |||||
Proceeds from borrowings | 139,296 | 133,612 | ||||||
Repayments of borrowings | (88,756 | ) | (114,135 | ) | ||||
Net cash provided by financing activities | $ | 33,540 | $ | 18,199 | ||||
Effect of exchange rate changes on cash and cash equivalents | $ | 2,524 | $ | (2,456 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | $ | (15,850 | ) | $ | (13,959 | ) | ||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | $ | 150,345 | $ | 149,802 | ||||
End of period | $ | 134,495 | $ | 135,843 | ||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Amounts in thousands - unaudited)
| Segment Data | Three Months Ended March 31, | |||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Revenues | Adjusted EBITDA | Revenues | Adjusted EBITDA | |||||||||||||
International | $ | 336,104 | $ | 33,776 | $ | 272,924 | $ | 34,900 | ||||||||
Americas | 263,531 | 31,931 | 206,205 | 15,837 | ||||||||||||
Consolidated | $ | 599,635 | $ | 65,707 | $ | 479,129 | $ | 50,737 | ||||||||
| Adjusted EBITDA reconciliation | Three Months Ended March 31, | Last Twelve Months Ended March 31, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Adjusted EBITDA | $ | 65,707 | $ | 50,737 | $ | 205,205 | $ | 165,355 | ||||||||
Restructuring | (483 | ) | (4,107 | ) | (10,664 | ) | (17,581 | ) | ||||||||
Depreciation and amortization | (30,147 | ) | (30,273 | ) | (114,542 | ) | (137,947 | ) | ||||||||
Receivable factoring charges and other | (105 | ) | (133 | ) | (443 | ) | (846 | ) | ||||||||
Acquisition costs | — | (679 | ) | — | (679 | ) | ||||||||||
Expense related to the compensation programs | (4,499 | ) | (158 | ) | (15,416 | ) | (158 | ) | ||||||||
Interest expense, net | (12,255 | ) | (13,601 | ) | (64,564 | ) | (56,994 | ) | ||||||||
Other income / (expense) | (850 | ) | — | (2,150 | ) | 33,661 | ||||||||||
Provision for income taxes | (6,613 | ) | (4,134 | ) | (12,776 | ) | (4,513 | ) | ||||||||
Net income attributable to noncontrolling interests | (1,733 | ) | (2,134 | ) | (8,040 | ) | (9,672 | ) | ||||||||
Net income / (loss) attributable to Tower International, Inc. | $ | 9,022 | $ | (4,482 | ) | $ | (23,390 | ) | $ | (29,374 | ) | |||||
| Free cash flow reconciliation | Three Months Ended March 31, | |||||||||||||||
| 2011 | 2010 | |||||||||||||||
Net cash provided by / (used in) operating activities | $ | (13,962 | ) | $ | 5,670 | |||||||||||
Cash disbursed for purchases of PP&E, net | (26,698 | ) | (18,685 | ) | ||||||||||||
Free cash flow | $ | (40,660 | ) | $ | (13,015 | ) | ||||||||||
| Net debt reconciliation | March 31, | December 31, | ||||||||||||||
| 2011 | 2010 | |||||||||||||||
Current maturities of long-term debt and capital lease obligations | $ | 131,146 | $ | 109,848 | ||||||||||||
Long-term debt, net of current maturities | 450,526 | 432,726 | ||||||||||||||
Obligations under capital leases, net of current maturities | 15,765 | 15,604 | ||||||||||||||
Total debt | 597,437 | 558,178 | ||||||||||||||
Less: cash and cash equivalents | (134,495 | ) | (150,345 | ) | ||||||||||||
Net debt | $ | 462,942 | $ | 407,833 | ||||||||||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Income / (expense) items included in net income / (loss), net of tax: | ||||||||
Selling, general and administrative expenses | ||||||||
Incentive compensation related to funding events | $ | (4,349 | ) | $ | — | |||
Acquisition costs | — | (679 | ) | |||||
Interest expense | ||||||||
Acceleration of the amortization of debt issue costs and OID | (753 | ) | — | |||||
Settlement of value added tax audit in Brazil | 2,838 | — | ||||||
Restructuring expense | ||||||||
Asset impairments | — | (1,842 | ) | |||||
Adjustment of lease liability | 754 | — | ||||||
Other income | ||||||||
Partial redemption of senior secured notes | (850 | ) | — | |||||
Total items included in net income / (loss) | $ | (2,360 | ) | $ | (2,521 | ) | ||
Net income / (loss) attributable to Tower International, Inc. | $ | 9,022 | $ | (4,482 | ) | |||
Less: Preferred unit dividends | — | (4,269 | ) | |||||
Income / (loss) available to common shareholders | $ | 9,022 | $ | (8,751 | ) | |||
Memo: Average shares outstanding (in thousands) | ||||||||
Basic | 19,102 | 12,468 | ||||||
Diluted | 19,890 | 12,468 | ||||||
Income / (loss) per common share (GAAP) | ||||||||
Basic | $ | 0.47 | $ | (0.70 | ) | |||
Diluted | 0.45 | (0.70 | ) | |||||
Diluted adjusted income / (loss) per share (non-GAAP)* | 0.57 | (0.50 | ) | |||||
| * | Excludes the certain items shown above |